BUSINESS PLANNING AND SIMULATION

It is difficult to predict; especially the future,Future today is not what it used to be in the past – Edward De Bono

The quote above, more or less tries to drive home the point that companies today, more than ever before, are trying to come to terms with their futures today. As more and more effort is being pooled into forecasting and planning, the topic of Business Planning and Simulation assumes greater significance than ever before.

What could be defined as Planning for an organization? I would put it as the 5-D phenomenon. Planning is design, decide, direct the future of an enterprise within limits of preconceived parameters of deviations and developments.

The next logical query that would be raised is why planning? Especially with the fact that there is a plethora of tools and solutions available in the market readily which promise a quick-fix solution for all planning purposes for an enterprise.

The reasons could be the following:

Organization always have required integrated business tools to run their systems and processes efficiently being in a perpetual state of readiness to adapt to the changing dynamics of corporate landscapes.

Moving the existing variegated processes and systems to an integrated platform is not always a successful transition because of a lot of issues pertaining to legacy issues.

Companies today are looking at more and better ways of streamlining their processes.

In the above-mentioned scenarios, the concept of Business Planning and Simulation assumes great importance. With the companies trying to go in for a uniform landscape of processes and systems, the importance stressed on the uniformity is significant.

Business Planning and Simulation or BPS tries to understand the future needs, growth prospects, ramp ups that the companies are trying to achieve and solutions for the same confirm certain parameters settings which are necessary to conform to achieve those goals, all the while providing scenarios wherein future situations can be simulated.

It forms a part of the Strategic Enterprise Management module. Now when we are through with the initial familiarization sessions with the concept and its definitions, we will try to look at the way it is organized. On the broad level, the planning can be divided into three main areas of interest:-

Planning structure

Planning flow direction

Planning integration

Within the broad umbrella of planning structure, planning can be further dissected into the following ambits:-

Planning Horizon or periodThis gives the organisation an idea of the future timescale for planning. This is that optimum amount of time for which planning needs to be done.

Planning Level or PurposeThis gives the raison detre for the organisation to go in for business planning. The reasons for going in are also as important as the fact that it is going in.

Planning AreaThis parameter gives the domain or the path along which the company is contemplating a business planning. It may be in some vertical, some horizontal line of product, some virgin markets etc.

Planning Data SituationThis parameter maintains the level of information or content that the enterprise would require for the kind of business planning that it intends to go in for. This would be also used in providing scenario simulations or cases when the organisation wants to check the feasibility of its business planning.

Within Business Planning flow direction, the following two methods are popular:-

Planning directionThe direction in which the planning can be initiated could be a bottoms up approach in which the the micro goals are first decided and then the upward path is planned, or it could be a top down approach in which the goals at the organizational levels are taken into consideration and these are dissected to the micro levels or it could be a mix approach taking in parts of both these solutions.

Planning organisationThe Planning organisation can be either centralized in which there is a central arm to which all other departments or divisions are reporting to, or it could be decentralized in which individual departments have adequate powers or it could be a sequential organisation wherein the processes are in some predefined order.

Planning techniqueWithin the planning technique, we talk about the different types or variations in the planning processes.

Contingency planning This refers to the safety measures that the enterprise keeps in its kitty while the business planning is being structured. A sensible and a feasible planning always makes adequate provisions for any untoward contingency and this planning type looks into just this.

Rolling forecast This type of planning process looks into the planning when planning itself becomes a routine activity for the enterprise and is becoming a process that needs to be repeated at regular intervals of time. The rolling forecast tries to systemize the process of business planning.

Alternative planning The alternative planning process basically looks into the if-not-this-then situation that most organisations face during their business planning processes. The idea here is that an a proverbial emergency door is being created to move into if the original plan does not go as per planning.

Planning integrationWithin planning integration, the planning processes could be of the following types:-

Vertical Integration

Horizontal Integration

These two integration processes define the way in which the business planning processes are accumulated across the matrix of the enterprise: in terms of horizontal line of systems or processes as well as the vertical line of systems or processes within that line.

Thus, in conclusion, I try to stress the importance that the companies across domains and geographies are putting to the Business Planning and Simulation.

Thus, in circumspect, when we look at the concept of Business Planning and Simulation, the following are the benefits that enterprises can accrue from the same:-

lowering overall cost

error free implementation

lowering the risks that are inherently involved in deliveries

After my first foray into the domain of BPS wherein I have introduced the topic and the related concepts, my subsequent weblogs will be dealing with the technical details and issues related to the same.